The Wall Street Journal said that in an interview Wednesday, Galvin said his office is looking at whether the company made “representations that were either flat-out untrue or potentially deceptive” to conservative investors. “It’s one thing when we see a pension fund taking unreasonable risks, but it’s worse when you have a pension fund attempting to do the right thing, and doing business with a reputable company, but losing because of misrepresentation,” Galvin said, according to the news report.
A State Street spokeswoman declined to comment to the Journal.
State Street is facing several lawsuits over “enhanced index” bond funds. The suits allege the company marketed the affected bond offerings as facing a small amount of risk, but instead actually took imprudently large positions in mortgage-backed securities that ended up causing investors significant losses when the nation’s subprime mortgage market collapsed last summer (see Two More Suits Filed Over State Street Bond Fund Losses ).
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